of an unprecedented Georgia lawsuit by their former employer, American Security Group.

William J. Krochalis, a former senior vice president and corporate officer at ASG, and his colleague Blair Schrum, a former member of the firm's mortgage market group, this month left ASG to help form Zurich Centre Real Estate Solutions.

ZCRES, based in Atlanta, is a wholly-owned subsidiary of Bermuda-based Zurich Centre Investments Ltd.

ASG is charging in the suit that the two executives breached their fiduciary duties to ASG, violated the Georgia Trade Secrets Act and tortiously interfered with ASG's relationships with its customers and employees.

ASG is the leading provider of lender-placed hazard insurance and insurance outsourcing services for the mortgage industry and provides other products and services to financial institutions.

The firm is an affiliate of Fortis, Inc., which is part of Fortis, the worldwide group of companies active in the field of insurance, banking and investments.

The lawsuit, filed with the Superior Court of Cobb County in Georgia, claims that while still employed by ASG, the two executives used company resources to formulate and execute a business plan to start ZCRES as a direct competitor to ASG.

ASG president and CEO Jeffrey W. Williams said: "Officers and employees of the company have a duty of undivided loyalty to the company during the term of their employment.

"Until this week, I do not recall an instance in which ASG has sued a former employee for breach of that duty.

"We have alleged in our complaint that their conduct violated their legal duties to ASG and was unlawful. We are taking legal action, which is extraordinary for this company, to protect our relationships with our customers and employees.

"The manner in which these individuals engineered their departure and established a competitive business demonstrates a breach of trust we placed in them.'' The company claims they violated the Georgia Trade Secrets Act by misappropriating trade secrets, documents and other materials, including "customer contact names..., customer pricing, procedure and training materials, strategic market research, market plans, analysis of potential acquisitions by the plaintiffs, reinsurance agreements, and internal financial documents.'' But the complaint includes an allegation that they also interfered with ASG's existing and prospective relationships with its customers. One exhibit suggests that on October 2, Mr. Krochalis as the new CEO of ZCRES sent letters to his former ASG clients, introducing ZCRES and stating "there may be opportunities for our two organisations to work together''.

It is further alleged that Mr. Krochalis and Mr. Schrum further attempted to damage ASG by encouraging five other ASG employees, who serviced the mortgage market group, to join them at ZCRES. The five employees have not been named in the action at this time.

The legal complaint adds that the two men resigned from ASG on October 1, and immediately announced the formation of ZCRES, staffed solely by former ASG employees.

ASG also said that ZCRES' Bermuda parent, Zurich Centre Investments Ltd., had no prior role in the hazard insurance and outsourcing industry.